if re price drop further? , page-67

Thanks Ausheds for your valuable contribution that has invalidated many of my earlier assumptions and require to explore the variables from 2009.

The chart on the costs comparison at 2009 shows Baotou CoP was slightly less than LYC. When taxes were included, LYC had cost advantage of supplying outside China.

As Baotou supply about 50 per cent of the world’s needs (4/09 slide 14), the rest of China supply 45% of the world. Baotou is most likely the lowest cost producer in China due to being a by-product of iron ore mining. The CoP had increased from US$3.5 to US$5.35 ie 53% from 2004 to 2009 (note slide 21) The CoP of other chinese producers can be interprepreted as higher than Baotou and increasing at a rapid rate due to environmental issues and declining grades.(4/09 slide 14)

The 4/09 presentation also shows that LYC is in a better competitive producer than Baotou in the longer term...

- lower Ce and higher output of the high price REs of which prices had increased many time more than Ce at current prices. (slide 20) Therefore, LYC revenue /kg at current prices is very much higher than Baotou. In addition LYC by-products from its waste provides more income.

- Key reagents products located near LAMP and port facilities lead to lower CoP increase due to less storage and transportation. Skilled labour available and also water, power and etc facilities lead to lower CoP on processing. (slide 33 & 42)

- LYC new advance plant means less maintenance and upgrading required. Baotou and other chinese producers CoP will increase due to environmental protection upgrades and increase regulation compliance. China Industry consolidation and regulation changes costs although it may lead to economy of scale.

- delivery cost and marketing advantages due to the Integrated PetrolChemical industries in the area and port facilities.

- 12 years tax free status.

http://www.lynascorp.com/Presentations/2009/Investor_Presentation_April_09.pdf

I am more convinced and very optimistic on LYC competitive advantage and that LYC is very much more profitable than most Chinese producers.